Pay-For-Delay Anti-Trust Lawsuit Against Pharma Company Dismissed

from the monopolies-galore dept

Last year, we wrote about the rise of pay-for-delay programs being run by big pharmaceutical firms to use patent lawsuits as a cover to pay off generic drug makers to prevent them from competing in the market. We were pretty disappointed that a part of health care reform that would have outlawed such deals got dropped, but figured that these still seemed like anticompetitive actions that the FTC could deal with.

Well, that might not work either. Joe Mullin points out that one such lawsuit suggesting that some of these deals were anticompetitive has been tossed out. The specifics here are a bit more complex -- as the deal that the big pharma, Schering-Plough (now owned by Merck) worked out with two generic drug makers was technically structured as a "license deal" where Schering got to license drugs from those generic drugmakers -- even if it never really did so. It still provided some amount of "cover." Furthermore, the agreement not to introduce the generics in the market only occurred during the time when Schering's drug was still covered by the patent. So, really, there was some dispute as to whether or not the generic actually violated the patent or not -- but since the ruling was not about determining that fact, just whether the actions were anti-competitive, the judge concluded that there wasn't enough evidence of any anticompetitive behavior.

So, basically, the only reason this wasn't anticompetitive was because it all happened under a government-granted monopoly. Talk about ironic, right? Because there's a monopoly, the company doesn't get labeled a monopolist. Isn't the patent system great?

This ruling is unfortunate for a variety of reasons. You can see why generic drug makers agree to these deals: it's either go through an expensive fight to put a drug on the market, or get out of the lawsuit and get paid a ton of money for nothing. Not hard to make that decision. But the end result is anti-competitive, in that it allows big pharma firms to keep the prices jacked up very high on their drugs, much to the detriment of everyone else.